Christian Credit Counselors Blog

Debt Consolidation Instead of Tapping Emergency Funds

Avoiding a Financial Crisis

When you have an emergency fund, it’s there to cover you when you have a financial crisis. Your 401(k) and IRA savings can help you prevent a retirement crisis. Still, a lot of people tap their only savings to pay down credit card debt. A better solution is to seek credit counseling so you can come up with a sound budget and plan to attack debt without destroying your only emergency reserves.

Through debt consolidation, you can actually achieve your goal of becoming completely debt free. Trained and experienced credit counselors such as those with Christian Credit Counselors specialize in credit card debt. A Debt Management Program gets you started on the right path so you don’t need to deplete our savings. According to an article by Money, you can use several smart strategies so you don’t feel like the one in eight people who say they feel like they will always be in debt.

Knowing Your Financial Standing

Your financial plan for getting out of debt starts with a custom debt analysis provided by Christian Credit Counselors. According to Money, you should tally up all your debt and know where you stand. Certified credit counselors help you lower your average interest rate owed on credit card debt, lower the number of years it takes to pay it off as well as deliver a lower monthly payment by negotiating with your creditors.

Following the 10 by 10 strategy

Money recommends people try a 10 by 10 rule which involves reducing 10 different expenses by 10 percent. For example, you could call your cable company and lower your bill by 10 percent by eliminating premium channels. You could use coupons to cut your grocery bill by 10 percent. Other ideas include finding ways to save on car insurance, reducing your utility bills, eating out a little less frequently and car pooling or driving less often.

Using cash instead of credit

As you enjoy the benefits of debt consolidation, you will likely put your credit cards aside. Take the opportunity to get more in touch with your spending habits by using cash only. Experts say people tend to spend less money when working with cash because using plastic credit cards feels too much like play money.

With the help of Christian Credit Counselors, you don’t have to call your credit card companies to negotiate a lower interest rate or deal with annoying bill collectors. Your only job is to follow your new Debt Management Plan. Part of your budget should include beefing up your emergency fund and saving what you can for retirement. By the time you are out of credit card debt, you could have a fully funded emergency fund. Most experts recommend people strive for 6 to 9 months of living expenses in a rainy-day account such as a savings or money market.

At Christian Credit Counselors, our team helps clients with debt consolidation, budgeting and education. We can help you with unsecured loans, medical and credit card debt.

Do you want to know more about debt and how you can make smart financial decisions now that will help you secure a more prosperous financial future? Sign up for our newsletter for monthly money tips.